Friday, March 14, 2014

The "doc fix" legislation that would replace the current unsustainable physician payment formula for Medicare while transitioning payments away from fee-for-service is a rather remarkable instance of substantive bipartisan cooperation. Republicans and Democrats have agreed on methods of bundling payments and paying for quality that, whatever their merits, would require intensive government monitoring. Had these methods been incorporated in the Affordable Care Act, Republicans would doubtless be demonizing them as relentlessly as they have the thus-far-dormant Independent Payment Advisory Board for Medicare, notwithstanding that Paul Ryan included a similar board in his 2009 Patients' Choice Act.

The doc fix must be "paid for," however, since the un-implementable cuts to doctors' payments mandated by the law they would replace are incorporated into the federal budget baseline. And in the pay-for, Republicans in both houses of Congress have introduced a poison pill: delay or repeal the Affordable Care Act's individual mandate. That would save money by ensuring that far fewer people enroll in Medicaid or enroll in the ACA's Qualified Health Plans (mostly with federal subsidies). CBO estimates that the 5-year delay proposed by the House GOP would result 13 million fewer insured Americans by 2018: seven million fewer buying private health plans, five million fewer in Medicaid, and a million eschewing employer-provided insurance.

As written, such a bill would probably destroy the ACA, draining the risk pool and thus inducing insurers to jack up prices. That's assuming no viable replacement for the mandate, however. In fact the outline of a viable replacement exists, in the ACA "repeal and replace" proposal introduced in the Senate this past February by Senators Coburn, Burr and Hatch.
That proposal would replace the mandate with a) a single open enrollment period in which all uninsured Americans could buy insurance without medical underwriting -- that is, pricing based in part on an individual's medical history; b) continued protection from medical underwriting for anyone who maintains continuous coverage; and c) an option for states to auto-enroll anyone who loses coverage in a catastrophic plan that would cost no more than the subsidy that person was eligible for, with an opt-out for those who were determined to "go bare" and thus lose their future protection from medical underwriting.

Such a mandate might work, it seems to me, with two modifications: 1) repeat the open enrollment at regular intervals -- say, three years* -- so that the loss of those subject to medical underwriting is limited; and 2) a federal catastrophic plan that provides the auto-enroll backup, ensuring that it is available to all.

As of now, a mandate repeal tied to a doc fix cannot pass, as Senate Democrats will block it. Suppose, though, that Republicans win the Senate in 2014, and reintroduce a linked doc fix and mandate repeal. And then suppose that Obama pulls a Nixon-using-wage-and-price controls and proposes a mandate repeal-and-replace. (Recall that Obama opposed the individual mandate in the Democratic nomination battle in 2007-8.) And then suppose a negotiation ensued.

The obstacles would be enormous. First, Democrats would scream betrayal. Republicans have been lacerating them with mandate attacks for four years; the Supreme Court challenge on which the law's survival hinged was directed at the mandate (but that's because, had it been struck down, Republicans would have allowed no fix). Second, an effective mandate substitute would wipe out much if not all of the budget savings and so weaken the doc fix linkage -- though widespread use of the catastrophic auto-enroll option might save the government some money, as the actuarial value of a catastrophic plan would be less than that of QHPs -- and, I assume, cheaper than Medicaid.

Finally, engaging in such a negotiation would entail implicit acceptance of the ACA on Republicans' part. But that's also the beauty of it. They'd have "repealed and replaced" the centerpiece, the vilified emblem of a jackbooted federal government imposing its will on a free populace. They could declare victory and go home -- or rather, keep reshaping the ACA according to their lights, mainly on a state level.

I ran this scenario by Donald Taylor of Duke, evangelist for long-term compromise that would enable the ACA to win broad-based acceptance and so meet its potential in red states. Here's his email response:

In policy terms that is a reasonable modification of the ACA, and a strong auto enroll regime would likely be a stronger risk pooling mechanism than the existing individual mandate. Such a deal makes sense for Republicans if you take Coburn-Burr-Hatch to be a serious proposal, which I do. It would be easier for Republicans to work out their details under cover of a deal with the President than it would be via the normal committee mark up, CBO score, floor votes, etc.

However, for this to happen now, Republicans would have to be ready to put their fingerprints in the ACA. And while I think this is eventually inevitable given the long run interests of Democrats and Republicans, I doubt the Republicans would be willing to make the deal prior to the 2014 election.

While I think the President might be likely to actually do the above deal, I don't think he can offer it. If past is prologue, if he offered an end of the corporate income tax tomorrow, somehow that would come to be described as 'socialism' by many Republicans the next day.

* * *

* An ACA replacement plan
created by James Capretta and Douglas Holtz-Eakin, on which CBH seems
closely modeled included an open enrollment period every five years.

About Me

I'm a freelance writer focused mainly on the unfolding drama of Affordable Care Act implementation and health reform more generally.
I have a Ph.D. in medieval English literature and a propensity to parse the rhetoric and logic of our political leaders as well as that of media pundits and scholars who jump into the national debate. I wrote a dissertation on the remarkably humane and subtle medieval English anchorite Julian of Norwich, a mystic nun whose knack of squaring circles and framing paradoxes reminds me a little of our current president. A sampling of that work (mind the google gaps) is here: http://bit.ly/OzwsrR